Revlon built a cosmetic empire on red nail polish, with lipstick in line. But the pioneering brand, the backbone of cosmetic cabinets since the Great Depression, has lost its luster amid the rise of a new generation of cosmetics brands, changing shopping habits and the roar of the supply chain. The company filed for bankruptcy protection this week, and its financial statements are strewn with red ink.
Revlon has filed for Chapter 11 in the US Insolvency Court for the Southern District of New York, with about $ 3.8 billion in debt. He said he had provided $ 575 million in “debt-hold loans” to help fund his insolvency operations. The company has about 5,700 employees.
Revlon’s challenges have been growing for some time. Amid declining sales in 2020, it cut 1,000 positions in hopes of improving profitability. Later that year, she narrowly avoided filing for bankruptcy by concluding a deal with the debt holders. Most recently, his business faced challenges from coronavirus-related shutdowns in China and supply chain challenges that raged across the country.
The company was founded in 1932 by Charles Revson and is growing to become the second largest makeup company in the United States, after Estée Lauder. Mr. Revson is famously courting buyers by campaigning for the attractiveness of combining red lips and nails.
Revlon was acquired by billionaire Ron Perelman for $ 2.7 billion in 1985 through a hostile takeover that was later described as one of the key corporate battles of the era.
She acquired Elizabeth Arden in 2016 in a purchase financed mainly by loans. Meanwhile, a new group of cosmetic entrepreneurs has emerged, such as Rihanna and Kylie Jenner. Social media superstars have promoted their products directly to millions of Instagram followers, embracing inclusive color palettes and bypassing drugstores that Revlon has traditionally relied on to sell its products.
“Consumer demand for our products remains strong – people love our brands and we continue to have a healthy market position,” Revlon CEO Debra Perelman, daughter of Mr. Perelman, said in a statement. The company’s stretched balance sheet “has limited our ability to focus on macroeconomic issues to meet this demand,” she said.
His debt management also created problems outside the company. Investment bank Citigroup accidentally transferred $ 900 million of its own money to a group of Revlon creditors in 2020, which a federal judge ruled was not necessary to return to the bank.
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